Assessing Requirements for LNG Bunkering in Australia

LNG fueled propulsion has been shown to meet the strictest emissions control regulations – such as the global 0.5% sulphur cap, to be implemented between 2020 and 2024 – in addition to being technically feasible. With an increasing number of ships being delivered with LNG propulsion outside the IMO Emission Control Areas (ECA), the necessity of the necessary infrastructure is growing on a global level.

Det Norske Veritas (DNV) and nine key members of the Australian maritime, port and energy sectors have recently established a four-month study to facilitate the adoption of LNG fueled vessels in Australian waters. Using LNG as marine fuel eliminates SOx and particulate matter emissions, nets a 15% reduction in GHG emissions and diminishes that of NOx by 85-90%. This addresses both local and global pollution issues.

The study aims to cover the infrastructure and regulatory requirements as well as the potential benefits and risks faced by energy majors, ports and ship-owners considering LNG fueled vessels. The study concentrates on LNG fueled OSVs and tugs plying Australian waters, but the key recommendations developed will be valid for most ship types. Geographically, focus will be on the ports of Dampier, Darwin and Melbourne as points of inclusion.

This Joint Industry Project (JIP) is managed by DNV and is co-sponsored by DNV along with nine industry Parties and Authorities, namely the Australian Maritime Safety Authority (AMSA), BOC Limited (Linde Group), Farstad Shipping Pty. Ltd., Ports Australia, Rolls-Royce Marine AS, SVITZER Australia, Swire Pacific Offshore Operations (Pte) Ltd., Teekay Shipping (Australia) Pty. Ltd. and Woodside Energy Ltd. Key obstacles in promoting LNG fueled ships will be identified, with an initial consideration of adequate infrastructure and existing regulations; which in Australia is complicated by the diverse state based legislative schemes. Safety is of utmost importance for such a development and ports will face the challenge of offering safe storage and ship-specific bunkering of LNG. These challenges will also be incorporated in the study.

Project goals include an assessment of the regulatory framework and infrastructure necessary for LNG bunkering at the Federal level and for selected States. By the end of 2012 the JIP will deliver a gap analysis and a map of legal and infrastructural challenges and opportunities. The JIP will also produce internal and external reports covering key areas for improvements as well as recommendations on the direction and steps to be taken in the LNG fuel domain for the benefit of the Australian maritime industry.

This JIP aims to give the required exposure to LNG as a fuel and to provide objective information to be used in subsequent detailed studies in triggered LNG bunkering initiatives.

This JIP leverages on the increasing interest in LNG as a marine fuel in the general Pacific region. Dr. Sanjay Kuttan, Managing Director of DNV’s Clean Technology Centre (CTC) paints the vision behind the initiative, “The convergence of availability of gas, innovative technologies, progressive regulatory measures and visionary leadership will make LNG a major cleaner energy source for power generation, land and sea transportation, petrochemical feedstock and domestic gas a reality in the near future. The team at DNV CTC is honoured to be part of this momentum to fulfil DNV’s purpose in safeguarding life, property and the environment.”

Why LNG?

In financial terms, there is an additional capital expenditure required by LNG fueled vessels. This is caused by the requirement of additional technology such an advanced fuel tank, a gas conversion and distribution system and double-walled piping. This additional CAPEX is projected to be justified over the typical lifespan of such a vessel through returns in the form of lower fuel consumption, less maintenance and, most probably, a cheaper fuel as the price of LNG is expected to escalate slower than the price of oil.

In environmental terms, the benefits of fueling ships with LNG may include giving such vessels a future competitive advantage due to lower emissions as previously mentioned, without additional exhaust gas abatement technologies or expensive low-sulphur distillates.